Simon Busuttil
So Labour backs the golden rule
Last week, EU leaders approved the draft new treaty that will bind 25 member states to stricter rules on public finances. Two countries – the UK and the Czech Republic – decided not to join.
The new treaty will now be ratified by each of the 25 countries. In our case, a vote needs to be approved in Parliament.
I have already expressed concerns, in this column, on the way this treaty was agreed. Because of the UK’s veto, it was drawn up as an international treaty outside the EU framework. As I see it, this is not the right way to do things in the EU.
I also argued that the same objectives could have been achieved, almost in their entirety, through mere changes in EU law rather than through treaty changes.
Let me add one more concern.
Even on the merits, I think that EU leaders could have done more. For instance, whereas the agreement is strong on deficit reduction it is not strong on debt sustainability and debt reduction. The markets are not so much concerned at high deficits as they are at accumulated debts that some EU countries have piled up over the years and can now ill-afford to pay back.
This explains why the markets were not all that impressed by the new treaty.
Despite my concerns, I agree that this treaty should, on balance, be supported because it contains important rules on achieving a balanced budget, that is, that governments will no longer be able to spend more than the revenue they raise.
This will be done, most notably, through a “golden rule” that will be introduced in the national constitutions of each country, obliging them to achieve a balanced budget, with a deficit not exceeding 0.5 per cent of GDP.
True to his word, upon his return from Brussels, the Prime Minister immediately moved a Bill to introduce this golden rule into our Constitution.
The spotlight immediately turned on the Leader of the Opposition.
Hot on the heels of his failed motion of no-confidence, will he support the golden rule or not? In the event, Joseph Muscat said that the Opposition will support the golden rule. This is welcome news.
The opposition did the right thing in resisting any temptation to trip up the government on what is clearly a matter of national interest. I have no qualms in stating this.
But if he is to be consistent with his support for the golden rule, Dr Muscat must now come clean on two other points that are glaringly contradictory with his new position.
The first contradiction is that the opposition still includes members who are clearly against the golden rule. The most outspoken of them is Alfred Sant.
When the Prime Minister moved the Bill to amend the Constitution, Dr Sant complained that the text of the treaty had not been published. In fact, this was not the case because the draft was published immediately after the agreement was reached.
More worryingly, Dr Sant stated that a constitutional change to implement a balanced budget “could be less than meaningful, indeed counterproductive, for a small island economy like Malta” and that certain government spending would be ok “even if eurozone budget deficit criteria are breached”. To put it simply, Dr Sant opposes the golden rule.
Now Dr Sant is no ordinary member of the opposition. He is a former Prime Minister, a former Leader of the Opposition and also the mentor of Dr Muscat himself.
So if Dr Muscat were Prime Minister today, Dr Sant would not just be dictating his policy on the euro. He would also have a veto on it in Parliament. And where would that leave Dr Muscat’s stability?
So Dr Muscat needs to come clean and tell us which is the real Labour Party. Is it the one in favour of the golden rule as claimed by Dr Muscat? Or is it the one against it as expressed by his mentor, Dr Sant?
There is a second issue on which the opposition must also come clean.
This concerns its mother of all promises, that to reduce water and electricity bills if it is voted into office. For the golden rule effectively means that the Labour Party will now no longer be able to keep its promise. Unless it does one of two things: either reduce government spending in some other areas or introduce new taxes.
But which areas of government spending will face the axe? Will it be education, health, pensions or will it be stipends? You need to know.
Conversely, if Dr Muscat intends to tax you to pay for his promise, he should tell you which taxes he will increase or introduce.
If he does not, he should not blame us for thinking that he is making a promise that he cannot keep.
So, yes, the golden rule is welcome. Very welcome.
For, at the very least, it will force the Labour Party to finally get off the fence and tell us what it really stands for.
simon.busuttil@europarl.europa.eu
Dr Busuttil is a Nationalist member of the European Parliament.
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Wilfred Camilleri
Feb 9th, 15:44
Right on! Muscat has hid behind his "Pjani Cari" words for too long and hasn't told anyone how he proposes to make up the loss of revenue from the subsidy of utilities if he reduces water and electricity bills. Talk is cheap but what Malta needs is clarification on Muscat's plans. Nothing else is acceptable.
Carmel J. Caruana
Feb 9th, 05:25
What a disappointing piece by Simon Busuttil. We floaters with a brain thought he was made of better stuff. It seems our political system really leads to the degradation of good minds. Thank God for people like Franco Debono who at least up to now have kept to the steady path.
Thomas C. Cassar
Feb 8th, 19:43
Simon Busuttil dak li ghamilna karriera nahsbuh u jilghabha li kien bniedem newtrali vis a vis politka partiggjana mbaghad meta x-xilep kien gewwa, u dhalna fl-UE, sirna nafu li kien Nazzjonalist ta' gewwa? Ahjar qalilna hu x'kien min qabel mela l-PL!!
Mr Andrew Camilleri
Feb 8th, 17:43
A lot of hypothetical questions that do not require an answer. Simon is just out to score politifal points by indulging in fantasy. Better if he concentrates on the real threat to his party in Govt which is creating instability, uncertainty and a threat to democracy in Malta.
Mr Joseph Vella
Feb 8th, 15:58
I wonder how will your government handle the golden rule...it will be the first time in decades since we had a balanced budget - should they manage to do so
Francis Attard
Feb 8th, 14:36
Nispera illi din l-emenda banali, ghalinqas, ma tghaddix mill-parlament unanimament.
j brincat
Feb 8th, 13:50
"Hot on the heels of his failed motion of no-confidence"
I thought you were going to say 'hot on the heels when Dr Gonzi lost his only one seat majority in Parliament and so to save face has to permanently rely on Mr Speaker!’
Quote: "True to his word, upon his return from Brussels, the Prime Minister immediately moved a Bill to introduce this golden rule into our Constitution"
Did he have any other choice; he has to depend on the Opposition, no?
Quote: "So, yes, the golden rule is welcome. Very welcome"
The golden rule is very much welcomed because we have a PN government which when it came to power in 1987 went on a spending spree and consequently fuelled a debt figure which has now eclipsed the €4 billion mark - this figure does not include the debt of corporations and authorities (Enemalta alone has more than €500 million debts with local banks).
Quote:"In the event, Joseph Muscat said that the Opposition will support the golden rule"
Not like the PN did in 1998 when they voted against (though there was agreement from BOTH sides) an MTA motion? Yet this was the first legislation of the newly elected PN government. How ironic!
Quote:"This concerns its mother of all promises, that to reduce water and electricity bills if it is voted into office"
What do you say about the trump card that GonziPN threw just a month before the elections i.e. that income tax would be reduced? This was done as a bait to lure the middle class. We are now on the eve of another election and many are waiting for the PM to fulfil this solemn promise!
Quote:"So if Dr Muscat were Prime Minister today, Dr Sant would not just be dictating his policy on the euro. He would also have a veto on it in Parliament. And where would that leave Dr Muscat’s stability?"
In-nanna Gerit kienet tghid 'li kieku w li kien QATT ma ltaghqu flimkien!'
I would advise you to stick to legal issues and not numbers and economics which, as it does not seem they are your forte!
(jb)
Alfred Grech
Feb 8th, 13:19
I worked with a company once and their profits were not doing that great. I was the sales manager then and the Prez of the company told me to increase the profit margin. In most tenders I submitted my prices were very close to other companies tendering on the same project so increasing the profit margin would mean losing the contract and told him that it's best if he finds a way of eliminating the waste and "luxuries" that were in existence. This government can do the same - over taxing us mean that we won't spend too much - saving money from various luxuries would help. There are times that instead of flying to some other country a phone call would suffice. There are many ways one can save money only problem is this admin don't know how or perhaps they don't want to know how. You guys are paid big bucks - why? That is waste of money that we are paying through our taxes. Calm down Simon - you and many others in the EU and in the parliament in Malta are money wasters.
m. borg (slm)
Feb 8th, 11:23
"So if Dr Muscat were Prime Minister today, Dr Sant would not just be dictating his policy on the euro. He would also have a veto on it in Parliament. And where would that leave Dr Muscat’s stability?"
.
Scare mongering will get you nowhere Simon, Dr Sant is no Mintoff or Franco Debono even if he were to vote against Constitutional Changes need a 2/3 majority so it really would depend on the nationalist vote, wouldn't it?
Or you don't know?
You happen to not know a lot of things.
m. borg (slm)
Feb 8th, 11:09
"Unless it does one of two things: either reduce government spending in some other areas or introduce new taxes."
Dear Simon that can easily be done by not spending, eh sorry splurging public funds on frivolous projects like Valletta's entrance, Parliament and roofless theater, the break water bridge leading to nowhere, roundabouts with evergreens instead of seasonal flowers that are costing an arm and a leg. Yes Simon there are many places where government can cut its expenses without cutting on jobs or useful projects.
For a MEP you do sometimes sound silly.
pat muscat
Feb 8th, 09:43
Yes after flouting the 'golden rule' for 25 years, ( the PN never balanced a budget ) you want a medal! Anqas tisthu ukoll!